ZICw2w

278 • Macroeconomics$2.00 per day. These people have difficulty meeting even these absoluteneeds. 19 For this group, greater consumption is probably very closely correlatedto greater welfare.Once absolute needs have been met, as is the case for the remainingthree-fifths of the world’s population, then welfare is determined by the satisfactionof a whole suite of primary human needs. Numerous researchershave proposed a variety of human needs, typically claiming that they arepursued in hierarchical order, with Maslow’s hierarchy (1954) (in whichconsumption is the lowest rung on the needs ladder) being the most famous.The hierarchical ordering, though generally not seen as rigid by theseresearchers, still leaves something to be desired. Even the 1.2 billion peopleliving in absolute poverty seek to fulfill needs other than mere subsistence.Manfred Max-Neef 20 has summarized and organized human needs intononhierarchical axiological 21 and existential categories (Table 14.1). Inthis matrix of human needs, needs are interrelated and interactive—many needs are complementary, and different needs can be pursued simultaneously.This is a better reflection of reality than a strict hierarchy inwhich we pursue higher needs only after lower ones have been fulfilled.Also important in Max-Neef’s conception, needs are both few and finite.This stands in stark contrast to the assumption of infinite wants, or thenonsatiety axiom in standard economics.If we are to evaluate the success of economic policies both now and inthe future (assuming that providing a high level of welfare for humans forthe indefinite future is our economic goal), then we must develop measurableindicators that serve as suitable proxies for needs fulfillment andwelfare.To state the obvious, we cannot precisely measure welfare, which in thepresent context is equivalent to quality of life (QOL). In the words of CliffordCobb, 22The most important fact to understand about QOL indicators is that all measuresof quality are proxies—indirect measures of the true condition we areseeking to judge. If quality could be quantified, it would cease to be quality.Instead, it would be quantity. Quantitative measures should not be judged astrue or false, but only in terms of their adequacy in bringing us closer to anunattainable goal. They can never directly ascertain quality. (p. 5)19 M. Ravallion and S. Chen, “The Developing World Is Poorer Than We Thought but No LessSuccessful in the Fight Against Poverty.” Policy Research Working Paper Series 4211, The WorldBank. 2008.20 M. Max-Neef, “Development and Human Needs.” In P. Ekins and M. Max-Neef, Real-LifeEconomics: Understanding Wealth Creation, London: Routledge, 1992, pp. 197–213.21 Axiology is the study of the nature of values and value judgments.22 C. W. Cobb, Measurement Tools and the Quality of Life: Redefining Progress, Oakland, CA. Online:http://www.rprogress.org/pubs/pdf/measure_qol.pdf.